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1986 (7) TMI 87 - SC - Income TaxWhether (a) investment reserve, (b) rehabilitation reserve, and (c) forfeited dividend reserve were includible in the capital computation of the company in accordance with the Second Schedule to the Companies Profits (Surtax) Act, 1964? ? Held that:- The distinction between " provision " and go reserve " is that while " provision " is a charge on profits which are taken into account in the gross receipts of the profit and loss account, If reserve " is an appropriation of profit to provide for the asset which it represented. Keeping these tests and the facts of these appeals in mind, we must hold that the conclusion of the High Court holding that the investment reserve and rehabilitation reserve were reserves and were entitled to be treated as such under the relevant Act is right. But on the facts of the case, the High Court was not right in holding that the forfeited dividend reserve was a reserve and question No. 2 is also answered in the affirmative. It should have followed in this respect its previous decision in respect of " Forfeited Dividend reserve " in CIT v. British India Corporation [1972 (7) TMI 22 - ALLAHABAD High Court]. The appeal, therefore, fails except on the point of " Forfeited Dividend reserve. "
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